The Financial Conduct Authority is offering its employees a new package, dropping bonuses while changing salary grades. Union Unite has criticised the plans and is calling for CEO Nikhil Rathi to come to the negotiating table.

 

The changes follow a staff consultation in September last year, to which the FCA said it received 4,500 responses, while 700 comments were raised in meetings and over 580 of staff questions answered. 

The changes were criticised by union Unite and staff. In response, the FCA has adjusted parts of its offer. It said it will review its pay ranges annually and, “given the external environment”, will also exceptionally this year give 1.5% increase to those who fall in the second performance category. 

 

“I recognise the strength of feeling expressed by many colleagues about the discretionary performance bonus and the desire to retain it in some form,” said Rathi. 

“The Board and ExCo considered this carefully but we concluded that the discretionary bonus scheme has not supported the long-term performance aspirations we have for the FCA/PSR,” he added. “Therefore, we have decided to maintain our proposal to end discretionary performance bonuses from the next financial year, with the last bonuses paid in April 2022.” 

 

In its consultation, the FCA argued that the payment of significant cash bonuses risks undermining confidence in it and does not include elements it asks regulated firms to have in their reward structures, such as clawback or deferred payment mechanisms for senior staff. 

 

“What's more, it has become increasingly difficult to justify these one-off payments following the publication of two independent reviews, which found that we acted too slowly and with insufficient creativity and assertiveness to prevent harm to consumers,” the consultation reads. “This is particularly so when bonuses are paid to the vast majority of staff and not just those who have performed exceptionally." 

 

Union Unite argued that the changes will affect staff negatively. Regional officer Dominic Hook said the pay proposals by the FCA were “a grave error and will be  significantly harmful for a large number of loyal, experienced and long serving staff”.  

 

Unite is urging Rathi “to not let his ego get in the way of doing the right thing”, Hook added. “This is not the time to continue on the path for the sake of his reputation. Instead the FCA should get to the negotiating table with Unite  and hear from the Unite workplace representatives in order to ensure they do not do irreparable damage to this regulator.” 

 

 

The FCA said under the new offer without bonuses, around 800 of its lowest paid employees would receive average increases of around £5,500, arguing that this will also help to improve diversity and equality.  

 

Overall, the offer “will see the vast majority of colleagues who meet core performance thresholds receive a guaranteed minimum base pay increase this year of at least 5% and 4% next year”, the FCA said, adding that it will be higher for many, with the average base pay rise this year at around 7% and almost 13% over the next two years. 

 

In his introduction, Rathi said that the FCA’s offer “needs to be compelling and have flexibility to be adjusted over time as our requirements and the market evolve. That is all the more important given the recently buoyant labour market.” He added that the turnover rate is in line with that before the pandemic at 13%. 

 

Rathi said there would be further recruitment for the next year, “particularly as we accelerate our expansion in Edinburgh and establish an office in Leeds, which will be led by William Hague and Stephen Braviner Roman,” saying that the geographical expansion would be achieved as vacancies arise rather than asking staff to relocate. The London versus national pay grades are also being adjusted; the differential between the national and London pay ranges will be no more than 10% in future. 

 

The expansion of the regulator is happening as the UK government aims to 'level up' regional economies. The FCA already moved its headquarters from London’s financial district Canary Wharf – where much of its regulated community is based – to the former Olympic Park in north east London in 2018 as the government sought to ensure long-term occupation of sites built for the event.